Image Source: VOA News
Concerns about a recession were allayed by the unexpected addition of 528,000 jobs to the US economy last month and the unemployment rate’s return to a half-century low. This was accomplished despite high inflation, a tighter monetary policy, and reduced fiscal support because the labor market remained robust.
According to the figures, job growth accelerated from June, when the economy gained 398,000 new positions—more than twice as many as experts had predicted—to a total of more than 250,000 new employment.
The unemployment rate decreased slightly from 3.6 to 3.5 percent, reflecting the 50-year low it last hit right before the Covid-19 pandemic in 2020.
According to the data revealed on Friday, the US labor market has recovered every job it has lost since the epidemic started in February 2020. This will calm worries about a decline in the world’s largest economy two months before the midterm elections that will determine control of Congress. Additionally, they might give the Federal Reserve more confidence to keep up its aggressive tightening of monetary policy in an effort to control rising prices.
Even though polls indicate that the majority of Americans disapprove of his management of the economy, President Joe Biden praised the study in a statement as proof that his economic policies were effective.
In comparison to other times in American history, more individuals are working. He said. In addition, it is the outcome of an economic plan to build the economy from the center and bottom.
According to figures on a gross domestic product released last week, the US’s output decreased for the second quarter, signaling economic instability. The National Bureau of Economic Research, which determines what constitutes a recession in the US, has not declared that one is underway, but any significant decline in job growth might make these worries worse.
Senior members of the Biden administration have brushed aside concerns that the US is in a recession, claiming that the economy is still in good shape and is simply transitioning from the boom it enjoyed last year to a slower footing.
The head of the Fed, Jay Powell, has advised against interpreting the GDP estimates too heavily and stated that he still believed interest rates could rise further without causing a terrible recession. The road to that result, though, was becoming “narrower,” he had cautioned.
Separate statistics from the US Labor Department issued on Thursday indicated that the number of people asking for unemployment benefits rose to 260,000 last week, the largest amount in more than six months, increasing concerns about the direction of the labor market.
Jobs are continually available
When his financial technology business announced a round of layoffs a few weeks ago, product manager Ian Charles was let go. The company cited a change in investor mood, making it more difficult for start-ups to secure capital.
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The 33-year-old was startled and terrified at first, recalling how challenging his job search had been a few years before. But, it’s a whole different game this time, he declared.
The Federal Reserve is likely to continue quickly raising interest rates, according to analysts, given the strong hiring.
The bank has already announced four rate increases since March as a result of consumer prices rising at their quickest rate since 1981. To 9.1 percent in June, the inflation rate increased once more.
But not as quickly; wages are also increasing. According to Friday’s statistics, hourly wages, on average increased 5.2% from July 2021.
The jobs data was deemed to be “uncomfortably hot” by economist Jason Furman, who served as an advisor to former president Barack Obama and currently teaches at Harvard.
He said on Twitter, “Nice to see this many jobs added, but it is worrying about what it indicates for the size of the adjustment we may have coming. “Recession concerns have diminished. The bigger concern is inflation. There will probably be more that has to be done by the Fed.”